What are some of the latest developments to affect the property market and the likely future relationship for landlords and tenants post-lockdown?
The past week has seen several property news stories that pursue these themes. Let’s take a closer look.
Landlords and the new tax year
Landlords – and other property investors for that matter – will be interested in milestones in the annual tax calendar. A handy reminder has been issued by online listings site Zoopla, including the following:
Making Tax Digital
- if you incorporated your buy to let business, remember that as from the 1st of April 2022 – and along with every other company large or small – you must switch to digital accounting of your business activities;
Capital Gains Tax
- from the start of this tax year, the new Capital Gains Tax (CGT) allowance is £12,300 – after which you pay CGT at 18% (if you pay income tax at the basic rate) or 28% (if you pay tax at the higher rate);
Rent a Room scheme
- the new tax year also resets your annual allowance of up to £7,500 tax-free on a spare room you are letting to a lodger in your house;
Mortgage interest tax relief
- the relief is no more, of course, and has instead been converted to the – less favourable – mortgage interest tax credit on your final tax bill for the year; and
Inheritance Tax (IHT)
- be prepared to pay IHT on assets – including property – worth more than £325,000 that you have left in your will to someone who is neither a spouse nor a civil partner.
Lockdown sees two-fifths move to more affluent areas during boom
The property market is currently enjoying a boom.
Last week, Property Reporter revealed that, thanks to this surge in property buying interest, 57% of those buyers have moved into a bigger home, offering more space for facilities such as a home office or for entertaining. Only 15% of buyers chose to downsize, while the remainder moved into homes that remained about the same size.
A significant proportion of nearly nine in every 10 (89%) of buyers moved into a new home that had that all-important garden.
Possibly reflecting that purchase of more spacious homes, 40% of new buyers were also moving into a more affluent area than the one they were leaving.
Homeworkers warned over planning permission – even if they’re not building
Advice from property experts in a story published by the Express newspaper on the 16th of April is likely to have taken many of the growing band of homeworkers by surprise.
The experts warned that in some circumstances – especially if you have adapted or restyled your home to accommodate homeworking or business needs – you might need to seek planning permission from your local authority.
Homeowners might readily understand the need for planning permission for converting a shed or other outbuilding into an office but remain completely in the dark about any such move towards working inside the home.
An article in Property Reporter on the same day suggested the potential scale of the issue when it revealed that 34% of those working from home are using an office inside the house – and a further 43% are planning to do so in the future, with some even planning to build an extension for that purpose.
Meanwhile, among those who have not yet created a home office but work inside the house, 48% use a table in rooms used for other purposes, 22% are perched on the sofa or an armchair, and 14% are working from their beds.
Shed conversions and other outbuildings are likely to become more numerous, suggests Property Reporter, which sees a growth from the current 10% to 13% of homeworkers.
You should also inform your home insurance provider if you are working from home or have added an office. You may also need to speak to your mortgage provider too.
Tenants are sticking with cities and towns
Young and middle-aged private sector tenants appear to be bucking what many had taken to be an overwhelming post-pandemic exodus of city-dwellers to the countryside, suggested Landlord Today on the 8th of April.
The conclusion was drawn from the results of a survey conducted by the Deposit Protection Service which revealed a 5% increase (to 50%) in the number of 18 to 35-year-olds who have chosen to live in towns and cities during the initial six months of 2021.
At the same time, the number of 18 to 22-year-olds continuing to live in the countryside or other rural areas fell from 13% to just 6% - the steepest decline for any of the age groups surveyed.